Free cash, the dollars left in the town’s coffers at the close of the previous fiscal year, is a number that Harvard’s financial committees anticipate with some anxiety as budget season looms. This year, it’s higher than usual—$827,421 to be exact—and unlike the two previous years’ calculations, was approved by the state before January.
Free cash, as defined by the Massachusetts Department of Revenue is “a revenue source which results from the calculation, as of July 1, of a community’s remaining, unrestricted funds from operations of the previous fiscal year based on the balance sheet as of June 30.” That revenue can come from expenditures that were less than anticipated, receipts that were higher than anticipated, or delayed receipts. The amount must be certified by the state. Approval of Harvard’s determination came Nov. 7.
A delayed highway reimbursement
This year, $400,000 of the free cash total came from Chapter 90 funds for the repair and improvement of town roads. That money was supposed to come in last year, but most of it was delayed by the highway department’s late submission of bills to the state for work completed. The other large piece of this year’s free cash came from local receipts, accounting for $283,000, which is higher than usual. Some of that money comes from payments made for various storms by the Federal Emergency Management Agency (FEMA). As it settles its accounts for a storm, FEMA usually has money left over, which it divides proportionally among the towns that were hit. by Harvard is still being compensated for the Halloween snowstorm of 2011. According to town Finance Director Lorraine Leonard, “We still got some FEMA money for the 2008 ice storm in 2012.” In addition to the FEMA money, penalties and interest revenues were higher than normal, as were license and permit revenues.
it’s not real.”
Lorraine Leonard,
Finance Director
When asked if she was surprised by the amount of free cash this year, Leonard replied that she was not. “I always have an idea,” said Leonard. Accounting Officer Fred Aponte does a pre-calculation, but except for Town Administrator Tim Bragan, Leonard and Aponte don’t talk to anyone about the numbers until they are certified by the state. “The Department of Revenue (DOR) can subtract things that you’re not expecting, so you’re never exactly sure what the number will be,” said Leonard. “For instance, last year $400,000 was subtracted because Chapter 90 funds were in deficit—the state hadn’t reimbursed the town yet. Until it’s in our hands, it’s not real.”
The free cash of a town is determined after the town has balanced its books for the fiscal year and sent the information to the revenue department. Harvard’s late certification of FY12 free cash resulted in a “needs improvement” mark in the FY12 audit this year. According to the auditors, the delay in closing the books was due to “inadequately trained personnel.”
In May 2013 the town appointed a new treasurer-tax collector, Tammy Coller, who had years of prior town treasurer experience. In addition, this year’s hire of a part-time receptionist helped to free up the assistant treasurer-tax collector, Susan Copeland, who had been handling phone calls and other receptionist tasks. Leonard says that they’re now “back on track.” “We were done on time this year,” added Leonard. “We now have a wonderful staff.” Board of Selectmen Chairwoman Marie Sobalvarro said, “I agree with Lorraine’s ‘back on track’ comment, and I know that Lorraine and the entire Finance Department have been working very hard to respond to a seemingly endless series of questions and requests from the DOR regarding this year’s submission.”
According to Leonard, the certification could have come even sooner. The DOR was planning to subtract money from Harvard’s free cash for the sewer system reimbursement from the Water Pollution Abatement Trust because it hadn’t come in yet. “We asked them to hold off until we got the money, because we knew it was coming soon,” said Leonard. “That held up our free cash number for about a month.” In the years between 2005 and 2008, free cash was certified in September. But how long it takes to close the books for a fiscal year depends on what happened that year. “If there are a lot of projects, it takes longer,” said Leonard. “October or early November is on track. September is early.”
